J.P. Morgan's 2014 Asian Country And Stock Picks Are…

J.P. Morgan issued its 2014 stock ideas for the Asian markets today. The report has 105 stock picks. I will only mention those with ADRs in the US.

The broker is now bullish on India, Taiwan, Korea, and Thailand, and has an underweight on China, Indonesia, Hong Kong, and Singapore.

The key reason behind all the four Overweight country calls is global economic recovery. Korea and Taiwan are export-oriented, especially in the technology sector. The play on India is not the local economy - September industrial production grew just 2% - but on export earnings and a corporate sector that manages to deliver despite macro headwinds. J.P. Morgan also expects Thailand's exports to pick up in 2014.

J.P. Morgan thinks China's problem is more structural and the Middle Kingdom has not managed to re-balance towards a consumption-led growth story:

Talk of rebalancing is simply talk: the data is that 57% of growth in 3Q13 was driven by investment. This is disturbing.

We expect China to remain a narrow market of expensive thematic sectors with occasional cyclical rallies with mini-stimulus similar to 3Q13.

The broker underweights Hong Kong and Singapore because it expects the property markets to deflate after the Fed tapers:

Zero interest rates generated bubbles in Hong Kong and Singapore property. We forecast asset deflation. Policy designed to control prices has just increased market friction through high stamp duty. This is counterproductive as it impacts supply. Lower transaction volume typically leads to volatility. Our concern is that property prices gap down. Avoid real estate and banks in Hong Kong and Singapore. We are UW on Hong Kong and Singapore.

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